Common-size statements

A common-size statement replaces every dollar figure with its share of the total. Cost of revenue stops being $400m and becomes 40% of sales. Nothing new is calculated; the same statement is rescaled so that size stops getting in the way.

It is the fastest way to compare a company with a rival ten times its size, and the fastest way to see what changed inside a company whose revenue moved. A cost that grew in dollars but shrank as a share of sales is a cost that is being controlled.

Revenue of $1,000m with cost of revenue of $400m and operating income of $180m.

1. 1Cost of revenue: 400 / 1,000 = 40%.
2. 2Operating income: 180 / 1,000 = 18%.
3. 3The same two lines for a rival ten times the size are now directly comparable.

Every example in this glossary describes the same imaginary company, so the figures join up as you move between metrics.

• Read down a column to see the shape of the business, and across the rows to see what is changing.
• The balance sheet version answers a different question: what share of everything owned is cash, stock, or goodwill.
• Small percentage moves on large lines matter more than large moves on small ones. A point of gross margin on $1,000m is $10m.

• It hides growth entirely. A company halving in size can show an unchanged common-size statement.
• Percentages of a volatile denominator swing for reasons that have nothing to do with the line being read.
• It gives no sense of absolute scale, so it should never be the only view.

A toggle in the Financials tab, applied to whichever statement is on screen: income and cash flow lines are shown against revenue, balance sheet lines against total assets. Nothing is re-derived when it is switched on — the same figures are divided, so a line that reads as not reported in dollars reads as not reported in percentages too.

The full methodology covers where the figures come from, how the statements are normalised, and what is deliberately left unadjusted.